Same-day delivery, now from Google

Google Inc. said today it is testing a same-day delivery service called Google Shopping Express.

The search engine giant put out a call for consumer “testers” for the service in the San Francisco Bay area, and also announced that the following large national e-retailers are taking part: Staples Inc., No. 2 in the Internet Retailer Top 500 Guide; Target Corp., No. 23; Toys ‘R’ Us Inc., No. 29; Walgreen Co., No. 33; and American Eagle Outfitters Inc., No. 65. The test also involves such local merchants as Blue Bottle Coffee, Palo Alto Toy & Sport and Raley’s Nob Hill Foods.

Google said deliveries would be free for test participants for six months, but did not say how much it would cost after that. London-based Shutl, which is rolling out its same-day service for retail chains in the United States and Canada, has said its typical delivery fee to shoppers is $10 or less, though retailers are free to set their own prices. Tom Allason, founder and CEO of Shutl, says Shutl recommends that retailers charge customers less than 5% of the total order value to get the best response. Wal-Mart Stores Inc., No. 4 in the Internet Retailer Top 500 Guide has been charging $10 in its test, launched last fall.

“We’re still working out our long-term pricing plan but early testers will get six months of free, unlimited same-day delivery,” writes Tom Fallows, product management director, Google Shopping Express, in a blog post today. “The pilot will expand as we work out the kinks, so please stay tuned.”

According to the program’s web site, consumers will be able to browse and shop from participating retailers “online in one place,” and then specify delivery times and instructions. The site also encourages other retailers to join the program, via an “interest form” that asks where they are located—for now, the checked boxes ask about Bay-area locations, with one box for “US locations outside the Bay Area”—the number of U.S. employees, the types of products sold, whether retailers have a “perpetual inventory management system” and whether retailers can “provide Google with your in-store product availability, multiple times per day.”

The test of Google Shopping Express represents Google’s latest step into commerce, notes Colin Sebastian, an analyst for private equity firm Robert W. Baird & Co. “We believe the new service is consistent with Google's ambitions to create a larger commerce platform, bring more local product inventory into search, and also counter competition from Amazon and eBay,” he says.

EBay Inc last year in the Bay Area introduced eBay Now, a mobile shopping app that lets consumers in San Francisco order online and have their purchases delivered the same day. Amazon.com Inc., No. 1 in the Internet Retailer Top 500 Guide, offers same-day deliveries of online orders in 10 markets: Baltimore, Boston, Chicago, Indianapolis, Las Vegas, the New York metropolitan area, Philadelphia, Phoenix, Seattle and Washington, D.C. Also last year, the U.S. Postal Service said it would begin testing Metro Post same-day delivery services for a select group of e-retailers. Wal-Mart Stores said last fall it would test same-day delivery service in four metropolitan areas: the northern Virginia suburbs of Washington, D.C., Philadelphia, Minneapolis, and in the San Jose/San Francisco area.

Rumors of Google’s test have been circulating for weeks. Asked this week if Wal-Mart would be interested in having Google take online orders that Wal-Mart would fulfill from its stores, Neil Ashe, global director of e-commerce at Wal-Mart said, “We may test things with others, but our principle goal is for people to come to Wal-Mart, whether it's online, on a mobile device or in store, and to fulfill that order ourselves."

In addition to its same-day option in 10 markets, Amazon.com also has an estimated 10 million members in its Amazon Prime program, which offers two-day shipping, and some 25,000 TV and film titles, in exchange for a $79 annual fee. A competing service called ShopRunner also offers two-day shipping from retailers for the same annual cost.

Sebastian says Google likely will use local courier services for the same-day deliveries, and that an “e-commerce marketplace [is] a likely next step” for Google. “As Google has continued to evolve its commerce initiatives over the past 3-4 years, we noted that Shopping Express is a logical step in leveraging the company's broad merchant and consumer relationships,” he says.

Survey results released earlier this month by The Boston Consulting Group cast doubt on consumer demand for same-day delivery. The consulting firm says that 9% of U.S. online consumers said same-day delivery was “a top factor that would improve the online shopping experience.” That compared with 74% who said the same about free delivery, and 50% who cited lower prices.